Friday, August 04, 2017
Finland’s Booming Construction Industry Faces A Labor Shortage – Despite High Unemployment
Via Business Insider: The construction industry is classically cyclical and it comes as no surprise that in Finland it is currently suffering from a dearth of management and manual workers. The surprise is that this is a country where the unemployment rate remains stubbornly high at 8.9%. According to the Confederation of Finnish Industries, 37% of member companies report they are suffering from a shortage of personnel, which is 3% more than a year ago. "The last time it was this high was in 2007 when the sector was red hot and the economy was growing at a rate of 5.2%", the CFI's Chief Economist Penna Urrila told evening daily Iltalehti. He went on to add that the main problem until now was demand, but that has now been superseded by recruitment difficulties. The root of the situation can perhaps be traced back to the removal of site manager training courses between 1997-2007, which, in turn, led to retirees being asked to return to work. Specialized construction management tertiary education has returned, but the ten-year gap has caused a demographic chasm that is proving difficult to bridge. Similarly, the Finnish Construction Trade Union accuses Finnish firms of not looking ahead. "Construction firms should look 2-3 years ahead like they used to in order to ensure there is a sufficient workforce", said the FCTU Deputy Chairman Kyösti Suokkaa, who went on to point out that when there is no work, a skilled employee is simply fired, which hardly encourages people to take up construction jobs. "This does not happen in the engineering industry. There, nobody expects somebody to come in and know how to use a computer lathe immediately, and then, when there is no work, kick him [or her] out", Kyösti Suokkaa said. "I am sorry [to say this], but in Finland there would be thousands of people ready to switch to the construction industry if it only was possible. When I started working on a construction site I was 15. Now it's impossible for anyone under 18 to get near one – which is Finland's biggest problem. It's not a question of pay, as current set rates are attractive". It would seem that foreign workers are the obvious solution and many Estonians, Russians and Poles are working in Finland, but statistics show that their numbers are no longer increasing in proportion to the total workforce. Even so, the Federation of Finnish Construction Industries currently claims a total of 20.000 foreign workers, which is six times more than are in the union, as many are self-employed. However, the construction boom in both commercial and residential properties – with the latter supported by high demand for low-interest mortgages now on offer – has led to some calls that a bubble is once again forming. "Risk increases when building permits raise residential costs too much, which the developer then passes on to investors", comments Juha Metsälä, CEO of home builder Pohjolan Rakennus, "The authorities now have good cause to create reforms that cut costs". Mortgage lender Hypo's Chief Economist Juhana Brotherus is not so concerned for the moment, seeing no bubble yet. "Both the Finnish industry and consumer confidence indexes indicate that Finland's economy is heading forwards and upwards. And the construction boom is being driven by the market, mainly producing new compact apartments". This comment refers to the late-80s boom when property speculation was fed by irresponsible bank lending which led to Finland's economy crashing by over 10% in 1991. The remedy was to devalue the Finnish currency, markka, in order to create an export-driven recovery, but caused unemployment to peak at over 22%.